"Looking at opposite ends of the fuel-economy spectrum, prices for used
compact cars, like the Ford Focus or Honda Civic, at $4 per gallon, will
increase by an average of $179," said Jonathan Banks, executive automotive
analyst for the NADA Used Car Guide.

"Used prices for large SUVs, such as the Chevy Tahoe, will decline by
$387, while price adjustments for other vehicle segments will land somewhere
in between," Banks added.

Those are much smaller price shifts than those from just about this time
last year, after the Japanese earthquake-tsunami and mounting domestic and
international economic turmoil forced many car buyers to dig deeper for a
ride.

However, buying a smaller car or selling a larger one can still add up to
more money out of your pocket for what can be your most expensive financial
transaction, other than buying a home.

FTC puts the brakes on scams

The FTC has your back on the used car front, in a first-of-its-kind FTC
case.

A group of car dealers from four different states have agreed to a
proposed FTC settlement that orders them to stop running bogus
ads with promises to pay off consumer loans on a trade in -- "no matter
how much you owe."

Instead of fully paying off the trade-in loans' "negative equity"
(balance on the loan after subtracting the vehicle's trade in value), the
rouge dealers rolled the negative equity into consumers' new vehicle loans
or, in one case, required the consumer to pay the difference out of their
own pocket.

The proposed settlement bars the dealers named in the complaint from
making similar deceptive representations in the future. The cases are the
first of their kind brought by the FTC.

For the dealers named in the case, the proposed settlement also:

 Prohibits dealers from misrepresenting any other facts related to
leasing or financing a vehicle.

 Demands that dealers comply with federal truth-in-lending laws and
related disclosure laws to make clear and conspicuous disclosures when
advertising certain terms related to issuing consumer credit for purchases
or leases.

 Demands dealers to keep copies of relevant advertisements and
materials substantiating claims made in their advertisements and provide
copies of the settlement order to certain employees. Finally, the dealers
are required to file compliance reports with the FTC to show they are
meeting the terms of the orders, which will expire in 20 years. Additional
infractions, including violations of the settlement could cost the auto
dealers $16,000 per violation.

The proposed settlement stems from the FTC's year-old proactive fact-gathering sessions to learn more
about motor vehicle sales, leases, and financing of motor vehicles and
ferret out problems before they spread.

The proposed settlement is open to public comment until April 16, 2012,
after which the FTC is expected to make the proposed consent orders
final.

 Determine the current value of your vehicle before you negotiate
to purchase a new car. Car value sources include: the National Automobile
Dealers Association's (NADA) Guides , Edmunds
and Kelley Blue Book .
 If you have negative equity, either because of your current car loan
or a rollover from a previous loan, think about postponing your purchase
until you're in a better, positive equity position, say by paying down you
loan faster. Also consider selling your car yourself to try to get more than
its trade-in value. Dealers will only give you a trade-in value.

 If you decide to go ahead with a trade-in, ask how the negative
equity is being treated in the trade-in. Read the contract carefully, making
sure that any promises made orally are included. Don't sign the contract
until you understand all the terms, and the amount you will be paying every
month.

 Keep the length of your new loan term as short as you can manage.
If the negative equity amount is rolled into the new loan, the longer your
loan, the longer you will take to reach positive equity in the vehicle.

The information contained on this website is provided as a supplemental educational resource. Readers having legal or tax questions are urged to obtain advice from their professional legal or tax advisors. While the aforementioned information has been collected from a variety of sources deemed reliable, it is not guaranteed and should be independently verified.